The overall positive market sentiment is keeping gold from pulling back strongly from last week's high of 2048.
According to Charlie Morris, founder and chief investment officer of ByteTree Asset Management, the weakening dollar and the rise in sovereign risks point to prospects for a significant and sustained rise in gold prices.
In Morris's view, investors should pay attention to the increase in sovereign risk. It could begin to rise if the yield on 10-year U.S. bonds reaches 4%. The price of gold should be higher if sovereign risks in the world are stronger.
In the current situation, the recent inflow of Wall Street investment in gold is also significant, the ByteTree founder added. Markets could observe a huge jump in the activity of central banks buying gold due to geopolitical reasons before that.
As Morris states, if central banks and Wall Street investors buy gold at the same time, then the bullish market is forming.
On the other hand, high levels of precious metals make investors be careful and close some of their long positions.
The Commodity Futures Trading Commission (CFTC) report for the week ending April 11 is interesting. It says that financial managers increased their long positions in silver futures by 4.2 thousand contracts to 42.7 thousand. Meanwhile, short positions grew by 4.8 thousand contracts to 25.0 thousand contracts.
The CFTC reported a 7,3 thousand contract decline in long gold futures positions to 135 thousand. Herewith, short positions decreased by 1.8 thousand contracts to 30.4 thousand.
Closing of long positions in gold creates balance on the price chart, but does not reduce the growth prospects of this metal.
However, on the H4 period the price was still in the impulsive phase of the third ascending wave formation.
On the H1 timeframe the price pulled back from the support 1982.00, which gives a short-term buy signal for gold.
Signal:
The medium-term prospects for gold are buying.
The target is at the level of 2048.00.
Part of the profit should be fixed near the level of 2021.65.
The stop-loss is at the level of 1970.00.
Bullish trend has a short-term character, so the volume of trade should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
